The Excise Tax and the Tenant Rules Are the Washington Variables
Washington has no state income tax, which draws self-employed and remote professionals in numbers that make it a strong alternative-documentation market. Two other features shape investing here more than the loan program does.
Real estate excise tax. Washington levies a graduated real estate excise tax on the sale of property, running from roughly 1.1 percent at the bottom of the schedule to around 3.0 percent at the top, with local additions in many jurisdictions. It is customarily a seller cost but is negotiable and is very much part of the transaction economics on both sides. On a high-value Puget Sound property this is a large number. Model it before you write an offer.
Tenant regulation in the Puget Sound jurisdictions is among the most extensive in the country. Seattle and several neighboring cities impose just-cause eviction requirements, notice periods well beyond the state baseline, restrictions on move-in costs and deposits, and in some cases seasonal limits on eviction. These do not affect whether you qualify for a loan; they affect your operating risk, your ability to reset rents, and your exit timeline.
If your experience is in a landlord-friendly state, do not assume your playbook transfers. Get local counsel before your first Seattle-area purchase.
The Lenders
Select Home Loans
Select Home Loans is a Non-QM mortgage broker (NMLS #2384002) writing 1099 investor loans across Washington. The state splits into two very different lending propositions high-value Puget Sound where ratios fail, and eastern Washington where they work comfortably and investor appetite differs across both.
We quote DSCR and bank statement alternatives alongside the 1099 program so you can compare paths on the same property.
Get a quote · (888) 550-3296
Other lenders worth calling — listed in no particular order:
Mbanc A direct lender holding a Washington consumer loan company license, publishing Washington-specific Non-QM programs across bank statement, 1099, DSCR, and asset utilization, including stated handling of the state’s excise tax at closing.
Angel Oak Mortgage Solutions One of the largest dedicated Non-QM investors nationally, with a purpose-built 1099 income program. Reached through a broker.
Griffin Funding Publishes qualifying on 90 to 100 percent of gross 1099 income, 620 minimum credit, and loan amounts to $4 million.
Newfi Lending A Non-QM lender covering Washington with DSCR, bank statement, and self-employed programs, with in-house underwriting.
Deephaven Mortgage A long-established Non-QM lender with DSCR and alternative documentation programs.
Carrington Mortgage Services Non-QM lender with alternative documentation investor programs and generally flexible guidelines.
Washington’s local Non-QM broker market is underrepresented in these results. Verify current licensure before relying on any listing see the disclaimer at the end of this page.
How Qualifying Works
A 1099 loan qualifies you on income documented on your 1099 forms rather than the net profit shown after deductions. Appraisal, assets, credit, reserves, and ability-to-repay analysis all work normally.
Programs split into two camps. Some apply 90 percent or more of gross 1099 income with no expense deduction. Others apply an expense factor of 10 to 25 percent first.
On $180,000 of annual 1099 income:
| Method | Qualifying income |
|---|---|
| 90% of gross | $162,000/yr — $13,500/mo |
| Gross less 20% expense factor | $144,000/yr — $12,000/mo |
| Net profit from your tax return | frequently under $80,000 |
At Puget Sound prices the spread between the top two rows frequently determines whether a purchase is reachable at all rather than just how much property you get. Push on the expense factor.
Model the payment with our mortgage calculators.
One year or two
One-year suits a technology or consulting contractor whose rate improved, or who recently went independent with prior experience in the same field.
Two-year suits construction working a wet-season-constrained schedule, agricultural and orchard-related contracting in the central and eastern counties, and maritime and fishing income with seasonal concentration.
The two-year self-employment history requirement is separate from the two-year income lookback. Ask about both.
Washington’s 1099 Population
Technology contractors and independent engineers across the Seattle–Bellevue–Redmond corridor — a deep, high-earning, low-overhead group and the best fit for gross-receipts qualifying.
Remote professionals relocated from higher-tax states, drawn by the absence of a state income tax.
Aerospace and manufacturing contractors around the Everett and Puget Sound industrial base.
Construction and specialty trades, working sustained demand and a constrained building season on the west side.
Agricultural, orchard, and wine-industry operators in the Yakima Valley, Wenatchee, and Walla Walla, with seasonal income patterns.
Maritime and commercial fishing operators, including the Alaska-season fleet based out of Seattle — income that concentrates hard and needs the 24-month treatment.
Washington Investment Markets
Seattle and the Eastside carry the highest values and the weakest ratios in the state. Prices have run far ahead of rents; most single-family and condo purchases will not clear DSCR. This is the clearest 1099 case in Washington, and it compounds with the tenant regulation discussed above.
Tacoma and Pierce County offer better rent-to-price ratios with genuine employment demand often the best balance in western Washington.
Spokane is the state’s strongest cash-flow market, with ratios that clear comfortably and a diversified employment base.
Tri-Cities and Yakima support steady demand at value-corridor prices from agricultural and energy-sector employment.
Leavenworth, Chelan, and the Olympic Peninsula are seasonal short-term rental markets. Several jurisdictions regulate short-term rentals actively verify the specific address.
Rural counties are where loan minimums bind.
Other Washington Specifics
Non-judicial foreclosure by deed of trust is available in Washington, which is comparatively favorable for investors and supports better LTVs than judicial states.
Wildfire exposure has tightened insurance availability materially in central and eastern Washington and in the wildland-urban interface. This functions the way coastal wind functions elsewhere get an actual binder before finalizing price.
Condo construction defect history is a real underwriting consideration in the Puget Sound market. Some older buildings carry litigation or assessment history that affects warrantability. Pull the association documents early.
Property taxes are moderate and vary by county and levy district, which helps ratios relative to Texas or Illinois.
Investment Property Terms
- Down payment: 20–25 percent typical, with more expected above conforming in the Puget Sound markets
- Credit: 620 floor at most investors; real improvements at 680, 700, 740
- Reserves: 6–12 months PITIA, large in absolute terms at west-side values
- Prepayment penalties: common on investment property, typically 1–3 years, often buyable at a quarter to a half point
Compare with our purchase loan options, refinance loan options, and jumbo loans.
1099 or DSCR?
Use DSCR in Spokane, Tacoma, Tri-Cities, and Yakima, where rent-to-price ratios genuinely work.
Use a 1099 loan in Seattle and on the Eastside, where they do not; on Leavenworth or Chelan seasonal property whose annualized rent gets discounted; on properties needing work first; or where you are also buying a primary residence.
If you already hold Washington rentals, a DSCR refinance works on the east-side portfolio.
Questions to Ask
- Who is paying the excise tax on this transaction, and at what rate tier?
- Do you qualify on gross 1099 income, or apply an expense factor?
- Have you placed a file on a wildfire-exposed property in central or eastern Washington recently?
- What is your appetite for Puget Sound condos, and how do you assess construction defect history?
- My income is seasonal will you run the 24-month scenario?
- Can you quote DSCR on the same property?
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Disclaimer
The lenders described on this page are listed in no particular order. Select Home Loans appears first because we publish this page and originate these loans; we have a commercial interest in this category. No lender listed has paid for placement.
This page reflects our opinion based on publicly available information at the time of writing. It is general information, not a recommendation, an endorsement, or an offer of credit. Lender programs, guidelines, licensure, pricing, and availability change frequently and without notice, and nothing here guarantees that any lender is currently licensed in Washington, currently offers the program described, or will approve your file.
Nothing here is legal advice. Landlord-tenant obligations in Washington and in individual municipalities are extensive, carry real consequences, and should be reviewed with a Washington attorney. Excise tax rates, short-term rental ordinances, and insurance availability vary and change; verify independently. Consult a licensed mortgage professional and where appropriate a tax advisor, attorney, or financial advisor before making any borrowing decision. Verify any lender’s licensure through NMLS Consumer Access at nmlsconsumeraccess.org.
Select Home Loans, NMLS #2384002. Equal Housing Opportunity.
